This blog is about working for yourself, quitting that horrible day job and finding the creative satisfaction in being your own boss. (Formerly at supergreendot.com)
Engineers are typically the type of people who dream up product ideas and can make stuff work, so they are often at the forefront of people who start their own companies.
Here I talk with engineers who have gone out on their own, by starting companies, or becoming solopreneurs. I hope that the interviews and articles here are inspirational and help YOU make an educated choice about whether or not to pursue that business, product or design you’ve always dreamed about.
This is Jeri Ellsworth. She is the President of Technical Illusions, which makes augmented reality glasses for gaming and other applications. Technical Illusions recently raised over $1 million on Kickstarter and is currently showing their 3D gaming glasses, CastAR, all over the country at conferences and events. Jeri’s background includes chip design, game consoles and computers, and blogging for element14.
SK: For context where are you talking to me from right now?
JE: I'm at my house now. Technical Illusions is split across a couple of homes right now. Rick (co-founder) has a pretty big house so mostly we work over there. Once we get another round of funding, we'll move into "real" offices. Right now, no sense in a team of people to burn money on offices.
Does your entire team typically work at Rick’s?
There are a couple of business people on the marketing side in California, and all of the engineering is based in the Seattle area. Rick has a bunch of cats so if there needs to be some kinds of optics stuff done, I'll do it on my kitchen table, cat dander free.
So (laughs), no pets at your house then?
No, no pets so we can keep the dander off the optics.
What kinds of responsibilities did you have at Valve Software (her most recent full-time position)?
I was tasked with creating the hardware lab, engineering, R&D, research ways that games could be made more fun through hardware...I was involved with all of those things....CastAR was just one of those things we were working on, but it was the most magical to me.
Well, if you haven't been fired, you're not one of the cool kids. There's a long list of very successful and skilled people who were fired from their jobs.
I'm a product person, so I am excited to be out of Valve and being able to work on CastAR.
For people with perceived stable jobs, it's terrifying to leave the security of the paycheck. What about you- when you left Valve, were you panicked about money?
Not terribly panicked, because I had savings- although I have burned through a lot of it developing CastAR.
For you personally, is making money a priority? Or is working on projects that you care about more important?
Oh- I'm definitely much more interested in working on projects or products that I care about. I've turned down opportunities to make a lot of money- as a chip designer, there's really good money and a lot of work, but it's not very exciting. I love working in a team and having the ability to influence the product in major ways. Working on one corner of a chip design, you don't get to guide the architecture a lot in many respects...so I've always enjoyed going to little startups, where you have much more room to guide the company.
I don't know what it’s like in the Seattle area, specifically, but if you live in a major metro area, it can be necessary to take jobs only at the highest of tech rates.
It does cost a lot more to live in Seattle than it did in Portland. Also, when I lived in Portland, I had a pinball side business, which was enough to pay rent and insurance. So I could afford to go out and do fun projects. Now, I don't have that income, as I gave up the pinball business before coming to Seattle to work for Valve, so I have to be more careful about spending.
Probably all of your spending is on making stuff though!
Pretty much that's 100% of it! But this year all of money outlay has been to CastAR. Once we left Valve, we had theories on how we wanted the head tracking system and all of the electronics to work, so Rick and I spent all this money on the first prototypes, which turned out really well.
After we did that, we spent a bunch of money going on a road show, we went to Maker Faire NY and SF and various game developer conferences.
Then we made a Kickstarter video, which was expensive, about $10k to get a professional video, plus all of the travel and promotion, so almost as much as to develop the glasses.
So yes, this has been a scary year for me financially, working for myself. I've run businesses before where it was a little bit more straightforward.
What do you mean by a straightforward business?
My first business was race cars, go race the car, win, you get money, come home, fix the car up, maybe convince someone to buy a car from you and repeat. Very straightforward.
But what if you didn't win?
Well I didn't always win- I lost a lot and I crashed a lot.
Plus there was sponsorship, another way to get revenue. I bootstrapped the first year, but when I won some races, I got a reputation and got more sponsors. The sponsors paid for me to go to the events plus I could get winnings on top of that.
So that's an example of a very straightforward business. Do something, people pay you to do it, get money. What did you do after that?
I opened a chain of computer stores, another straightforward business. Get some video cards, sell some video cards, make some profit, that's how it works. So you can see revenue fairly quickly from that.
You’ve had such a long history of not having a regular job, do you have people in your life who tell you to just get a real job?
I hear that all the time- especially when I was younger. I struggled (financially) a lot, and at that point in my life, it seemed like everyone I talked to was telling me to go back to school, get a real job. It took a lot to ignore this and just go out and do the riskier thing.
It has been my own experience that eventually, those naysayer people just go away on their own.
Yes, after all this time, I've proved many of them wrong and that it was the right choice for me. It is hard to know going into these risky situations that it is going to come out well. For every success, I've had a couple of failures. It is easy to look back on my career at all of the positive things, but there have been contract jobs where I've totally blown it and lost money by underbidding.
How much money do you feel that you need to have saved up to feel secure?
I always felt pretty secure with a couple of years of rent in the bank. I always looked back at the low periods in my life and they were during the transitions to get something big going.
I always simplify the two tracks of going out on your own into consulting, which is a sure paycheck if you can get people to hire you, and selling a product, which is very risky- in fact, very few products succeed. What would you tell someone who wants to get out of their day job and wants to know how to get work as a consultant?
I would say get connected via trade shows or Meetup groups and then once you are connected, always follow through with what you say you are going to do. It’s easy to get far into a project and you're struggling and it's taking longer than you thought it would, but you have to try as hard as you can to actually deliver. Your career as a consultant depends on that reputation.
Regarding consulting, I think charging by the hour is less risky than by the job- but consultants differ on this opinion. Which do you prefer?
I've found it easier to get the work by the job. So it depends on your confidence level and if you'll be able to achieve the project in what you think it will take time-wise. Sometimes it works out that you're working for minimum wage on a contract job because you quoted too low.
Even if you're very good at estimating time, what do you do when the customer wants to change things?
You have to get that into your contract. So there's the summary of work and there is some wording that says that the contract needs to be re-evaluated if the specifications change. And so, by having that wording, as soon as there are design changes, you can hold that in front of them and discuss the impact that it will have on the schedule.
What have been your experiences working remotely?
When I was living in Portland and working in Silicon Valley, I would always make an arrangement to work part of the month at the office. Most of the work would happen at my own lab in Portland, but having the face time was critical for the client to feel comfortable and to see that work was happening and to gain trust.
As milestones are ticked off, the client relaxes and they gain trust that you are going to deliver on what you say you are going to deliver.
How many different milestones/ pay periods will you break a project into?
I don't connect milestones with pay periods. You can really get yourself into trouble by doing that. Some milestones will take 90% of your time and some of those will get done really quickly. It's hard to know always how to break them up. Some of the milestones might be specifications and block diagrams, which are easier and make people feel warm and fuzzy. Then try to tick off the things that the client thinks are a risk area.
Let’s talk about CastAR and Technical Illusions: Since the number of products that make is successfully financially is very low, were you pretty fearless going into determining that the CastAR glasses were going to be a viable product?
You are right, most products are not successful and I'm a risk taker, so I'd rather try than not do it., which is part of the reason I'm doing it. I also know that the product is magical, and as soon as we started showing people the glasses, they were so into them. And if you can impress people, that's a great sign.
So you can have bleeding edge products like this which have a lot of technical hurdles, and maybe it's too early, but really are impressive, and don’t fail. Then you have me-too products, and they fail for that reason. I am pretty sure that this kind of interaction with computers is coming, but is it in the next 5 or is it in the next 20 years, I don't know.
How do you look for applications for the CastAR glasses? Do you have a sales and marketing team? Do people approach you?
We do have a sales and marketing team, Christine and Brian, who we started working with after the Kickstarter. We have one market which we think is a good intro for these glasses, which is the gaming space. But we have been approached by many companies and museums that want to work with us, which is really refreshing. So we have to figure out which market to go after and how can we also support all these other vertical markets.
Let's talk generally about funding – what has been your experience with raising money?
Kickstarter is changing since less companies got a lot of funding in the past year- it's gotten much more difficult to get money that way. Kickstarter for Technical Illusions was good for PR because it really got the attention of folks and it may lead up to getting funding in the future.
So I've worked at companies that were venture funded and also at companies that were bootstrapped by the founders. Some of the companies that I worked with that were Venture funded became very stressful for the founders of the company because the VCs only gave them enough money to get through part of the project- so they always have to go for a second round of funding, and money gets tight. As a contractor you're the last person to get paid...employees first, then vendors and contractors get stalled. It is way better to be told honestly what is going on that to be lied to.
What do you think Venture Capitalists are looking for?
I've only experienced VC funding from a distance, so you need to have a deck of what your product is, what does it do, what do you think your sales will be. And it's short, I'm told (wink) that it's about 5-6 slides. You need to have a good team put together, VCs are looking for a good, capable team that can make money.
Do you think Technical Illusions is in a good position relative to other companies in terms of getting a second round of funding?
We are further ahead than most venture funded companies, with an idea on the back of a napkin. The more you have in Sales and product completed, the less they will take in exchange for equity. If you are just beginning, a venture capitalist will take a large chunk of your company in exchange for equity.
Like Shark Tank! Have you considered going on that show?
I've watched a few of those, and the gyrations they make you go through seem reasonable, but come on, they're Sharks! And also, the thing with the Shark Tank, is that to be on the show, you give up a portion of your company, it says on the contract. We were actually looking at Shark Tank because we were looking at everything, but when we saw that, we decided against it. As an engineer, I’ve had to interact with VCs (at VC funded companies) and they were very nice people. I've been involved in conversations where we didn't know those things and they provided guidance and were very helpful and nice....(unlike Shark Tank). But it does seem like all the things they are asking for on Shark Tank, even though they are creating a lot of drama, are all the things that most VCs are asking for.
So, even you have been generally happy in your career, are you happy with the way your career is going now that you are President of your own company?
I'm very, very happy because I see the potential- the team is great, I've always been happy in my career because I try to work on exciting projects.